line of credit Definition | Business Dictionaries from AllBusiness.com
Facebook Twitter Google+ You Tube RSS Feed
data-override-format="true" data-page-url = "http://www.allbusiness.com">

Business Glossary

SEARCH THE BUSINESS GLOSSARY

Business Definition for: line of credit
line of credit

bank's moral commitment to make loans to a company for a specified maximum amount for a given period of time, typically one year. There is usually no commitment fee charged on the unused line. However, a compensating balance requirement often exists.

line of credit
See also bank line
line of credit

commitment by a bank to lend funds to a borrower up to a specified amount over a specified future period. Lines of credit are reviewed annually, and do not require fees or compensating balances unless the line is guaranteed by the lender. Bank lines are considered good until further notice and may be withdrawn at the bank's option. When the borrower is officially notified of the credit available, the line is referred to as an advised line. When the maximum credit is kept internal by the lender, and not disclosed, it is a guidance line. In a commercial line of credit, the borrower is usually required to keep 10% to 20% of the available line in a compensating balance .

See also check credit , revolving credit , overdraft , home equity credit
line of credit

borrowing power that a business firm or an individual has with a lending institution such as a bank.

line of credit

agreement whereby a financial institution promises to lend up to a certain amount without the need to file another application. The borrower is expected to reduce the debt after having reached the full amount of credit.

See also bank line
line of credit

an agreement whereby a financial institution promises to lend up to a certain amount without the need to file another application.

Example: Happy Homes Brokers, Inc., has a line of credit under which they can borrow up to $50,000 at 3% above the prime rate through The Goodmoney National Bank.

See also home equity line of credit , home equity loan
Copyright © 2005, 2000, 1995, 1987 by Barron's Educational Series, Inc., Reprinted by arrangement with Publisher.
Copyright © 2006, 2003, 1998, 1995, 1991, 1987, 1985 by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.
Copyright c 2006, 2000, 1997, 1993, 1990 by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.
Copyright © 2000, 1995, 1991, 1987 by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.
Copyright © 2007, 2000, 1997, 1987, by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.
Copyright © 2004, 2000, 1997, 1993, 1987, 1984 by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.

Newsletter

Weekly Roundup

Sign up for our weekly Experts roundup, delivered to your inbox each Saturday morning.

Most Recent From our Experts

AllBusiness Experts

AllBusiness Greatest Hits

;
Close

Real Business Owners, Real Business Advice!

Sign up for practical, real-world solutions from successful business owners delivered to your inbox each Saturday morning. FREE.